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Sunday, November 11, 2012

S'pore needs to restructure economy to sustain growth: Tharman

SINGAPORE: Deputy
Prime Minister Tharman Shanmugaratnam said Singapore's economic growth
will be weak in the short-term mainly because of the gloomy world
economy.

And the challenge for Singapore, he said, is to restructure its economy to ensure sustained growth over the long-term.

Mr Tharman, who's also Finance Minister, was speaking to reporters on the sidelines of a community event in his Jurong GRC.

Many countries in the world are now bracing themselves for the possibility of a "fiscal cliff" in the US.

This
means a huge economic crisis may be looming for the US - if its deeply
divided Congress is not able to come to an agreement.

Congress,
which is made up of the House of Representatives and Senate, will still
be controlled by two parties in the new Obama administration.

The Republicans regained control of the House, while the Senate is dominated by the Democrats.

Mr
Tharman pointed out that even if the US gets past this hurdle, the
bigger challenge is to put its mid-term budget on a more sustainable
path for the years ahead in order to restore investor confidence.

He
said: "That's what's necessary to really get the economy to restart.
And it requires common ground to be found on both taxes and spending on
the parts of the Democrats and the Republicans.

"The experience
of the first term was one of intense partisanship. Hopefully in the
second term, there will be a willingness to find common ground. The
initial signs are positive but it's too early to say."

The
effects of sluggish growth in the US and Eurozone are likely to cascade
to Singapore, even though Mr Tharman said Asia continues to do
reasonably well.

"Demand will be weak, but our real challenge in
Singapore is in restructuring our economy. We've got to persevere in
restructuring our economy so that we can get sustained growth over the
long term, over the next five to 10 years based on productivity growth.
That's the big challenge. Demand will be weak in the short term but it's
not a fundamental problem for us because our unemployment rate is low,
and that's the bottom line of the short-term. Unemployment rate is low,
jobs are available and training places are available. Our real challenge
therefore is to focus on restructuring our economy so that we can move
one whole level higher - productivity, skills, expertise," Mr Tharman
shared.

He said this means using management methods and
technology to improve efficiency and productivity so that workers can
get paid more.

"They can have more satisfying jobs and we can
grow our economy without growing employment year after year, especially
foreign employment. So we got to find the right balance. It's something
that affects every sector of the economy. And, we look at the most
developed countries and we can see how it's done. They too went through
that transition. In some cases not very long ago, they went through the
same transition. They ramp up on labour and they have to upgrade, do
with less labour, but using technology and everyone playing that part,
including customers, everyone playing that part. You can move up to a
higher level. That way, our workers can get good wages, get good jobs,"
he said.

Mr Tharman added that the government will provide every
form of support to help companies, especially small and medium
enterprises, to make this transition.